Counting on Medicaid to cover long-term care? The rules just changed

Long-term care can be one of the most expensive health care costs any of us will ever face. In most cases, Medicare does not cover this type of medical care.

On the other hand, Medicaid does cover long-term care for people of low income. However, new rules may make it more difficult to qualify for this coverage.

Find out more about the changes to Medicaid and how they might impact your retirement plan.

What is long-term care?

Long-term care provides services to people who have a disability or type of chronic illness. It usually helps people with day-to-day activities, including personal care assistance such as bathing, dressing, and using the bathroom, meals delivered to someone's home, adult day health care, and transportation

Does Medicare cover long-term care?

Contrary to popular belief, Medicare does not cover most types of long-term care. That is because most long-term care is non-medical, according to the U.S. Centers for Medicare and Medicaid Services.

Medicare does cover up to 100 days of skilled nursing care per benefit period if you have been in the hospital for a qualifying reason. But after that point, coverage stops.

Because Medicare generally does not cover long-term care, most people are responsible for paying the cost out of pocket.

How much does long-term care typically cost?

Long-term care is expensive. Life Happens says national median costs for long-term care services are:

• $8,821 per month for a private room in a nursing home
• $7,756 per month for a semi-private room in a nursing home
• $4,300 per month for an assisted-living facility

Does Medicaid cover long-term care?

Unlike Medicare, Medicaid does cover the costs of long-term care. However, you must meet specific income requirements to be eligible for this coverage.

These requirements vary by state. In general, you will not be eligible for this coverage unless your income and "countable assets" fall below a threshold established by your state.

How has the role of Medicaid changed in regard to long-term care?

The One Big Beautiful Bill Act became law in the summer of 2025. The legislation included some key Medicaid changes. As part of the act, total cuts to Medicaid are projected to be $911 billion over the next decade, according to the Congressional Budget Office (CBO).

Additionally, starting in October 2028, states must impose cost-sharing requirements of up to $35 per service on Medicaid expansion enrollees who have incomes between 100% and 138% of the federal poverty level.

Crucially for long-term care planning, a $1 million cap on home equity will also apply for Medicaid long-term care eligibility beginning in 2028. If your home equity exceeds that figure, you should not expect Medicaid to cover your long-term care costs.

Finally, beginning in 2027, the retroactive coverage window for most new Medicaid applicants will be reduced from the current 90 days to 30 or 60 days depending on the beneficiary group to which you belong.

Critics react to the Medicaid changes

Critics have pounced on the changes to Medicaid that are part of the One Big Beautiful Bill Act.

Sam Brooks, director of public policy at the National Consumer Voice for Quality Long-Term Care, says the new rules are "very bad" for those in nursing homes.

"The overall bill and its huge cuts to Medicaid is really going to reshape how nursing home and other long-term care is provided in this country — and not for the better," Brooks told AARP.

KFF also cites a CBO estimate that the Medicaid changes will result in an additional 7.5 million people without health insurance by 2034.

Alternative ways to pay for long-term care

It should be noted that even before these changes, a large percentage of Americans would not have been eligible to have Medicaid cover their long-term care services.

Overall, more than 70 million Americans are currently enrolled in Medicare. But just 12 million seniors qualify to be enrolled in both Medicare and Medicaid, according to CMS.

So for most seniors, nothing has changed: The burden remains on you to find a way to pay for long-term care should you need it. And odds are good that you will need long-term care at some point. There is about a 70% chance that someone who is 65 today will eventually need some long-term care, according to the U.S. Department of Health and Human Services.

One way to cover some of this cost is to purchase long-term care insurance. While this coverage can make sense for some people, it is expensive and has other potential drawbacks.

Another option is to save more money in an IRA, 401(k), or health savings account (HSA) with the goal of earmarking the money for future long-term care expenses.

If your income and assets are modest enough that you qualify for Medicaid, it might also be wise to consult with an elder law attorney before the 2027 and 2028 provisions take effect. That will give you time to review asset planning and spend-down strategies, and to learn whether your current home equity levels will affect your eligibility under the new cap.

Bottom line

New federal rules may make it more difficult for seniors to qualify for Medicaid to pay for their long-term care services. For these folks, the rule changes might require a rethink of your long-term care strategy.

However, for the vast majority of retirees, turning to Medicaid was never an option. For these seniors, it is important to look for ways to finance long-term care services without help from the government.

Sitting down with a financial advisor or other money professional can help you craft a plan to cover long-term care costs and lower your financial stress.